Corporate Debt Maturity Choice in Transition Financial Markets
This paper investigates the determinants of liability maturity choice in transition markets. We formulate a model of firm value maximization that describes managers' choice of optimal debt structure. The theoretical predictions are tested using a unique panel of 4,300 Ukrainian firms during the period 2000-2005. Our estimates confirm the importance of liquidity, signaling, maturity matching, and agency costs for the liability term structure of firms operating in a transition economy. In addition, we find that companies do not react uniformly to determinants of debt maturity. Firms that mainly rely on external funds are sensitive to signaling and they consider the variability of firm value an important determinant of their debt maturity choice. For less constrained companies that rely more on internal funding, asset maturity is an essential determinant of debt structure.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: Mohrenstraße 58, D-10117 Berlin|
Web page: http://www.diw.de/en
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chittenden, Francis & Hall, Graham & Hutchinson, Patrick, 1996. "Small Firm Growth, Access to Capital Markets and Financial Structure: Review of Issues and an Empirical Investigation," Small Business Economics, Springer, vol. 8(1), pages 59-67, February.
- Harris, Milton & Raviv, Artur, 1991. " The Theory of Capital Structure," Journal of Finance, American Finance Association, vol. 46(1), pages 297-355, March.
- William Greene, 2004. "Fixed Effects and Bias Due to the Incidental Parameters Problem in the Tobit Model," Econometric Reviews, Taylor & Francis Journals, vol. 23(2), pages 125-147.
- Morris, James R, 1976. "On Corporate Debt Maturity Strategies," Journal of Finance, American Finance Association, vol. 31(1), pages 29-37, March.
- Johnson, Shane A., 1997. "An Empirical Analysis of the Determinants of Corporate Debt Ownership Structure," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 32(01), pages 47-69, March.
- Blackwell, David W. & Kidwell, David S., 1988. "An investigation of cost differences between public sales and private placements of debt," Journal of Financial Economics, Elsevier, vol. 22(2), pages 253-278, December.
- Harvey, Campbell R. & Lins, Karl V. & Roper, Andrew H., 2004.
"The effect of capital structure when expected agency costs are extreme,"
Journal of Financial Economics,
Elsevier, vol. 74(1), pages 3-30, October.
- Campbell R. Harvey & Karl V. Lins & Andrew H. Roper, 2001. "The Effect of Capital Structure When Expected Agency Costs are Extreme," NBER Working Papers 8452, National Bureau of Economic Research, Inc.
- Binks, Martin R & Ennew, Christine T, 1996. "Growing Firms and the Credit Constraint," Small Business Economics, Springer, vol. 8(1), pages 17-25, February.
- Bandyopadhyay, Arindam & Das, Sandwip Kumar, 2005. "The linkage between the firm's financing decisions and real market performance: A panel study of Indian corporate sector," Journal of Economics and Business, Elsevier, vol. 57(4), pages 288-316.
- Brick, Ivan E & Ravid, S Abraham, 1985. " On the Relevance of Debt Maturity Structure," Journal of Finance, American Finance Association, vol. 40(5), pages 1423-37, December.
- Barclay, Michael J & Smith, Clifford W, Jr, 1995. " The Maturity Structure of Corporate Debt," Journal of Finance, American Finance Association, vol. 50(2), pages 609-31, June.
- Flannery, Mark J, 1986. " Asymmetric Information and Risky Debt Maturity Choice," Journal of Finance, American Finance Association, vol. 41(1), pages 19-37, March.
- Asli Demirgüç-Kunt & Vojislav Maksimovic, 1998. "Law, Finance, and Firm Growth," Journal of Finance, American Finance Association, vol. 53(6), pages 2107-2137, December.
- Olivier Renault & Jan Ericsson, 2000.
"Liquidity and Credit Risk,"
FMG Discussion Papers
dp362, Financial Markets Group.
- Demirguc-Kunt, Asli & Maksimovic, Vojislav, 1999. "Institutions, financial markets, and firm debt maturity," Journal of Financial Economics, Elsevier, vol. 54(3), pages 295-336, December.
- Kane, Alex & Marcus, Alan J. & McDonald, Robert L., 1985.
"Debt Policy and the Rate of Return Premium to Leverage,"
Journal of Financial and Quantitative Analysis,
Cambridge University Press, vol. 20(04), pages 479-499, December.
- Alex Kane & Alan J. Marcus & Robert L. McDonald, 1984. "Debt Policy and the Rate of Return Premium to Leverage," NBER Working Papers 1439, National Bureau of Economic Research, Inc.
- Tadesse, Solomon, 2002.
"Financial Architecture and Economic Performance: International Evidence,"
Journal of Financial Intermediation,
Elsevier, vol. 11(4), pages 429-454, October.
- Solomon Tadesse, 2001. "Financial Architecture and Economic Performance: International Evidence," William Davidson Institute Working Papers Series 449, William Davidson Institute at the University of Michigan.
- Guedes, Jose & Opler, Tim, 1996. " The Determinants of the Maturity of Corporate Debt Issues," Journal of Finance, American Finance Association, vol. 51(5), pages 1809-33, December.
- Christoph Duenwald & Nikolay Gueorguiev & Andrea Schaechter, 2005. "Too Much of a Good Thing? Credit Booms in Transition Economies; The Cases of Bulgaria, Romania, and Ukraine," IMF Working Papers 05/128, International Monetary Fund.
- Emery, Gary W, 2001. "Cyclical Demand and the Choice of Debt Maturity," The Journal of Business, University of Chicago Press, vol. 74(4), pages 557-90, October.
- Stohs, Mark Hoven & Mauer, David C, 1996. "The Determinants of Corporate Debt Maturity Structure," The Journal of Business, University of Chicago Press, vol. 69(3), pages 279-312, July.
- Douglas W. Diamond, 1991. "Debt Maturity Structure and Liquidity Risk," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 709-737.
- Aydin Ozkan, 2002. "The determinants of corporate debt maturity: evidence from UK firms," Applied Financial Economics, Taylor & Francis Journals, vol. 12(1), pages 19-24.
- Boot, Arnoud W A & Thakor, Anjan V, 1994. "Moral Hazard and Secured Lending in an Infinitely Repeated Credit Market Game," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(4), pages 899-920, November.
- John R. Graham & Michael L. Lemmon & James S. Schallheim, 1998. "Debt, Leases, Taxes, and the Endogeneity of Corporate Tax Status," Journal of Finance, American Finance Association, vol. 53(1), pages 131-162, 02.
- Shane A. Johnson, 2003. "Debt Maturity and the Effects of Growth Opportunities and Liquidity Risk on Leverage," Review of Financial Studies, Society for Financial Studies, vol. 16(1), pages 209-236.
- Nina Budina & Harry Garretsen & Eelke de Jong, 2000. "Liquidity Constraints and Investment in Transition Economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 453-475, July.
- M. Dewatripont & E. Maskin, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 541-555.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp784. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.